Last week witnessed unprecedented turbulence in the Indian stock market, recording the deepest single-day fall after the COVID-19 pandemic. On June 3, the market opened in euphoria and surged up to 2,600 points, as exit polls predicted a thumping majority for PM Narendra Modi. However, the very next day, the Sensex crashed by as much as 6,100 leading to a loss of over Rs 31 lakh crore on June 4 when actual voting showed the BJP falling short of majority.
Now, the Opposition is terming it the “biggest stock market scam” and accusing PM Modi and Home Minister Amit Shah of influencing the markets. In response, the government says the volatile market movement is natural during such events and now the market has recovered the losses within just three days.
June 3 Election Optimism Turns to June 4 Market Mayhem: Why?
On June 3, the BSE Sensex and the NSE Nifty zoomed more than 3 per cent, recording their biggest single-day gain in three years and closing at lifetime highs. This happened after the exit polls predicted the return of the Modi government for the third straight term. It led to a total gain of over Rs 11 lakh crore in investors’ wealth.
On June 4, the vote counting day, the benchmark stock indices crashed 6 per cent in the biggest single-day fall in four years, as counting trends showed the ruling BJP might fall short of a clear majority in the Lok Sabha elections. It led to a total loss of over Rs 31 lakh crore in investor wealth.
What Are the Opposition’s Allegations?
TMC MP Saket Gokhale has written to Sebi demanding an investigation into the exit polls which showed much higher number of seats than the BJP actually managed to get. “The investigation must also determine whether the BJP & any poll agencies have made crores by manipulating the stock markets through exit polls.”
On June 6, Congress leader Rahul Gandhi also held a press conference blaming PM Narendra Modi, Home Minister Amit Shah and Finance Minister Nirmala Sitharaman on the stock market losses on June 4. He said PM Modi, Shah and Sitharaman created hype in the market by claiming that their party BJP was winning by a big margin and gave “specific investment advice” to investors.
Gandhi has sought a Joint Parliamentary Committee investigation.
What’s the Government’s Response?
Following this, the same day, senior BJP leader and commerce minister Piyush Goyal held a press conference and said, “Rahul Gandhi talks about Rs 30 lakh crore (loss) in the stock market. He does not even understand that this is valuation, which is not important. Buying and selling is more important.”
“On June 3, when exit polls came, foreign investors bought shares worth Rs 6,800 crore at higher valuations, while domestic investors gained by selling the stocks on higher valuations. The next day, when the Indian stock market crashed, foreign investors sold at lower valuations, while domestic investors bought in the hope that the Modi government is returning. So, foreign investors bought at a higher valuation and sold at a lower valuation, while domestic investors bought at a lower valuation and sold at a higher valuation. Hence, even during this period, Indian investors gained,” Goyal said.
The market has now recouped the high levels within 3-4 days, he added.
Goyal said India’s stock market is a very respectable market across the world and is well regulated. Sebi has also been globally recognised on multiple occasions for ensuring this.
“Today, retail investors are not just bystanders, instead they participate in the stock market and take benefit,” he added.
On seat claims, Goyal said, “Every political party claims that it is winning, we also did that. We lived up to that. We are going to form the government.”
Home Minister Amit Shah had claimed that the BJP-led government is going to come, which is true and we are forming the government now. “Rahul Gandhi also claimed that he was going to get 295 seats. So, the claims were made on both the sides.”
He said Rahul Gandhi should be worried that when their seats were increasing, the market crashed. It shows the fear among global and domestic investors that if their government comes, it will be a problem for them.
“When the UPA government was in power 10 years ago, India’s market cap at that time was Rs 67 lakh crore. Today, the market cap has increased to Rs 415 lakh crore,” he said.
Stock Market Right Now?
On June 7, Friday, the Indian stock market recouped the lost ground. Benchmark equity indices Sensex and Nifty climbed over 2 per cent to settle at record high levels. The rise comes on the day when the Reserve Bank of India revised upwards the country’s GDP growth projection to 7.2 per cent for 2024-25 from 7 per cent earlier.
The 30-share BSE Sensex jumped 1,720.8 points, or 2.29 per cent, to hit a new record peak of 76,795.31 in day trade. The benchmark ended at a record high of 76,693.36, up 1,618.85 points, or 2.16 per cent.
On the previous day, on June 6, regaining the 75,000 level, the Sensex surged 692.27 points, or 0.93 per cent, to settle at 75,074.51. The Nifty climbed 201.05 points, or 0.89 per cent, to 22,821.40.
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